David C. Smith
With more than 75% of new loans in the leveraged loan market this year offering weak protections (according to a Moody’s Investors Service report this month), McIntire Finance Professor David C. Smith advises in a Sept. 27 Bloomberg article that with covenants, “lenders can come in and see what’s going on, kick the tires, and adjust things accordingly.”
Without covenants, however, creditors “are reduced to asking the owners, ‘Can we please agree or negotiate?’ And the owners can say no,” he says.
